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Poll: Student loan debt cripples graduate happiness

August 10, 2014 at 8:18 PM EDT
Gallup poll finds that student loan debt undermines the happiness of graduates for years following their graduation. Doug Belkin of the Wall Street Journal joins Hari Sreenivasan from Chicago.

HARI SREENIVASAN: A story published earlier this week in the Wall Street Journal got our attention. It described a Gallup poll measuring how student loan debts undermine the happiness and well-being of borrowers years after they graduate college.

Yesterday, I interviewed the author of the piece, Douglas Belkin, who joined us from Chicago. I began asking him how Gallup defined well-being.

DOUG BELKIN: Gallup came up with this well-being index thirty years ago and they have a series of questions that looks at sense of purpose in life, whether or not you are connected to your job, how well you feel physically, if you have a lot of energy, if you’re connected to your community, if you have good social relationships, a lot of soft qualitative questions like that.

Then they asked them and they correlated with how much debt you have and they did this for, they asked thirty thousand college graduates these questions in March and it turns out that even twenty-five years after you’ve graduated the more debt you carry when you graduated the more poorly you scored on those questions later on.

HARI SREENIVASAN: So these people said that they felt what, less physically fit, less connected to their job, their family, how bad is it?

DOUG BELKIN: It’s worse than you think. The interesting part about this to me was that it carries on so much longer. The real question is why I think.

But you’re talking about a difference of fifteen points in terms of the number of people the percentage of people who feel physically fit for instance or have a purpose in their job so folks don’t have a strong answer for what exactly is happening, except that if you get out of school and you owe a whole lot of money your choices are going to be limited.

So, maybe you owe five or six hundred bucks a month when you graduate school and you want to get a job in the helping services or helping people but you’re drawn toward a job that pays better that you like less. These sort of things influence decisions you know for years.

HARI SREENIVASAN: Is there a tipping point number of student debt that makes people feel worse? Is it twenty-five thousand dollars, is it fifty thousand dollars?

DOUG BELKIN: Around twenty-five thousand dollars the numbers start to look a little bit bleaker. The average debt right now for a graduate of college is thirty-three thousand, a little more than thirty thousand dollars and that’s for the seventy-odd percent of kids, who graduate with debt.

This survey looked at college graduates for decades, because people who graduated before 1990 took out so little debt, this survey looked at just at 1990 forward.

Right now the numbers that were worse at fifty thousand dollars, plus, thirty-three-six for where kids are graduating now has almost doubled in ten years and it’s probably going to hit fifty thousand eventually.

HARI SREENIVASAN: Let’s talk a little bit about correlation versus causation. These are subjective answers that these people are giving, what about the possibility that the people who didn’t take out debt were maybe wealthier and happier to start with?

DOUG BELKIN: Yes, it’s entirely possible. This survey doesn’t look at that, it can’t look at that, it isn’t known if it is causal or correlational, whether or not you’re happier if you’re just more engaged in life, if you’re more upbeat, you do better these things carry on, it’s not clear if that’s because, it’s not clear how that stands later on in life.

HARI SREENIVASAN: What about the idea of the things that the debt might compromise in your life? If you have a huge student debt maybe you are putting off buying a house or another major purchase and maybe that gives you some sort of tension ten years, fifteen years down the line.

DOUG BELKIN: Yes, so, if you have big debt and you can’t save up for a house, right now kids who are graduating are putting off buying houses much longer than they were a decade or two ago and they’re putting off marriage and children as well.

Furthermore, if you may pay off the debt and you may get into a house but you didn’t start saving up for retirement because you were focused on trying to pay off your debt, so that adds financial stress to you, to your life, even into your forties and fifties

HARI SREENIVASAN: So, is there a takeaway lesson here? Let’s say I’m a parent of a child about to go to college, or about to entire college myself, is there some way that I should structure my debt thinking forward and saying this might make me more or less happy?

DOUG BELKIN: I think it goes, it’s an antecedent to structuring your debt, it’s how you structure your college experience. Twenty years ago the conventional wisdom was you take out as much debt as you need or you go to the best school you got into and that’s sort of where the thinking stopped.

Now it’s more about how you go to college, so what this survey has found is that if you are connected to a professor, if you have a mentor at school, if you sort of have experiential learning in school, you’re much more engaged in work as you go.

So, how you go to school, what you do while you’re there is as important or more important than where you go to school, there is no relationship to being much more happy in life or engaged in work, according to the prestige of the school that you went to.

HARI SREENIVASAN: Alright, Doug Belkin of the Wall Street Journal, thanks so much.

DOUG BELKIN: Thanks very much.